Dish closes chapter on Blockbuster's video rental business

blockbuster stores, including this one in Miami, will be closed, Dish Network announced. (Joe Raedle, Getty Images)

The end credits are rolling on Blockbuster, the one-time video rental behemoth that, like other brick-and-mortar chains, failed to stay relevant as consumers increasingly turned to the Internet for goods and services.

Those stores employ about 2,800. In Colorado, Dish still operates 14 Blockbuster outlets, each employing up to 10 full- and part-time workers. There were more than two dozen stores in the state at the beginning of the year.

FILE - OCTOBER 21: Netflix shares jumped 10% in after-hours trading after reporting their third-quarter results on October 21, 2013. The streaming service provider added 1.3 million customers with a net income increase of 315%. SAN FRANCISCO, CA - OCTOBER 24: A U.S. Postal worker holds a stack of Netflix envelopes at the U.S. Post Office sort facility on October 24, 2011 in San Francisco, California. Online movie rental company Netflix reported third quarter earnings of $62.5 million, or $1.16, per share compared to $38 million, or 70 cents per share one year ago. (Getty Images North America | Justin Sullivan)

Dish, based in Douglas County, will also cease the Blockbuster DVD-by-mail service by mid-December.

"This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment," Dish CEO Joe Clayton said in a statement, adding that the company continues to "see value in the Blockbuster brand."

Dish will still offer Blockbust er@Home, an online streaming service.

About a decade ago, Blockbuster operated 9,000 stores worldwide. The company struggled as low-priced kiosk video rentals from the likes of Redbox took off in the mid-2000s. The rise of Netflix, initially through its DVD-by-mail offering and subsequently its streaming service, helped deal the final blow.

Advertisement

Dish paid a net purchase price of $234 million in 2011 for Blockbuster when it still operated about 1,700 stores. After the acquisition, Dish had systematically shuttered underperforming stores before announcing the final closures Wednesday.

In this screen shot provided by Wal-Mart Stores Inc., the film "True Grit" is shown as one of the titles available on the company's new video-streaming service. The world s largest retailer on Tuesday, July 26, 2011 started streaming many movies the same day they come out on DVD, in a second bid for a share of popular movie rental and streaming website Netflix Inc. s business and just two weeks after Netflix announced new price increases. Wal-Mart Stores Inc. bought video-streaming service Vudu.com 18 months ago and now offers 20,000 titles that can be viewed on almost any device with Internet access, from computers to televisions to Sony s PlayStation3 and other Blu-Ray disc players. (Wal-Mart Stores Inc. | )

With hopes of entering the wireless business, Dish had planned to sell cellphones and related services at Blockbuster retail locations. But the satellite-TV company's wireless strategy stalled after its bid for Sprint and Clearwire were rebuffed earlier this year.

Dish will retain licensing rights to the Blockbuster brand and the company's video library.

About 50 franchised locations will remain open, though none is in Colorado. At least one analyst believes those outlets should move away from the Blockbuster name.

"I'm not sure how much value that brand really has," said Michael Arrington, an IHS senior analyst covering the U.S. video market. "Blockbuster might carry too much baggage. If I was a Blockbuster franchisee at this point, I would almost consider ditching (the brand)."

MIAMI, FL - NOVEMBER 06: A Blockbuster video store is seen on November 6, 2013 in Miami, Florida. Blockbuster announced today that it will close its 300 remaining U.S. stores by early January. (Getty Images North America | Joe Raedle)

The traditional video rental market peaked in 2001 with $8.5 billion in revenue, according to IHS. In-store rentals are projected to drop below $1 billion in 2014.

"It's the end of the nationwide, in-store video rental era," Arrington said. "But it's kind of the rebirth of the regional and mom-and-pop video chain era. Those guys are still around."

In 2012, Colorado granted Dish up to $2.5 million in tax incentives over five years for relocating Blockbuster's headquarters from Texas to Douglas County. Dish spokesman John Hall said Wednesday that the company has not applied for any of those incentives.

Article Comments

We reserve the right to remove any comment that violates our ground rules, is spammy, NSFW, defamatory, rude, reckless to the community, etc.

We expect everyone to be respectful of other commenters. It's fine to have differences of opinion, but there's no need to act like a jerk.

Use your own words (don't copy and paste from elsewhere), be honest and don't pretend to be someone (or something) you're not.

Our commenting section is self-policing, so if you see a comment that violates our ground rules, flag it (mouse over to the far right of the commenter's name until you see the flag symbol and click that), then we'll review it.